Scientists have discovered tantalising evidence of water gushing down gullies on Mars, dramatically boosting the chances that regions of the planet might still be capable of harbouring life.

Pictures taken from Nasa's Mars Global Surveyor, which has been orbiting the planet for 10 years, reveal distinctive streaks of what is believed to be water, bursting out of crater walls and flowing around boulders and other rocky debris strewn across the surface.

Researchers have previously found evidence that ancient lakes once dotted the Martian landscape, and vast quantities of water ice are known to be locked up in sheets of permafrost at the planet's frigid poles. But this is the first evidence that liquid water, crucial to nurture life, might still be found on the planet today.

Nasa scientists compared pictures of the Martian landscape taken between 1999 and 2006 and looked for signs of recent changes on the surface. They identified two craters where light streaks suggested water had erupted from the walls and poured down the slopes, leaving mineral deposits for hundreds of metres.

The first crater was in a region on the planet's southern hemisphere called Terra Sirenum. Images of the crater taken in April 2005 revealed an apparent burst of water from the north-west wall of the crater that were not visible in an image taken in December 2001. The second crater was also in the southern hemisphere in a region called Centauri Montes. Here, images taken in February 2004 suggest a liquid flowed down the crater's north wall and left deposits that were not seen when the crater was previously photographed in August 1999.

Because of the extremely thin atmosphere on Mars, any water that did erupt from the ground would quickly boil and evaporate, despite surface temperatures ranging from -8C to below -100C.

"These observations give the strongest evidence to date that water still flows occasionally on the surface of Mars," said Michael Meyer, lead scientist for Nasa's Mars exploration programme.

Scientists with Malin Space Science Systems in San Diego, who led the study, said that in each case the flood of water pouring down the crater walls would be enough to fill five to 10 swimming pools. "If you were there and this was coming down the slope you'd kind of want to get out of the way," said Ken Edgett, a scientist on the team, adding that the evidence was "a squirting gun for water on Mars".

The scientists believe the light-toned streaks were caused by a liquid because of the way the patterns appear to trickle and twist around features along the crater walls. Other changes in the Martian surface usually appear as dark markings.

If they are right, the images add weight to a long-speculated-upon theory that liquid water remains buried beneath the Martian surface. Sudden impacts from asteroids would leave craters with cracked walls from which subsurface water could easily erupt, they say. The research appears in the journal Science tomorrow.

Another possibility is that the markings are caused by jets of liquid carbon dioxide, an explanation that some scientists favour because previous computer models suggested liquid water could only exist several kilometres below the crust.

The researchers also documented the formation of 20 new craters by asteroids pummelling the surface in recent years. The craters have shown up as dark spots, produced by dust kicked up during the impacts. The scientists believe the rate of new asteroid impacts is so high that if astronauts were to live on the planet for 20 years they would be likely to witness or be threatened by an impact nearby.

Mars Global Surveyor suddenly lost radio contact with Nasa mission controllers last month. Efforts to re-establish contact with the spacecraft, which has mapped the planet since 1996, have failed and scientists fear the probe has finally failed.

Nasa's Mars rovers, Spirit and Opportunity, which landed in 2004, have sent back strong evidence that liquid water once flowed on the surface in ancient times, based on observations of alterations in ancient rocks.

Colin Pillinger, the Open University space scientist and leader of the ill-fated Beagle 2 Mars project, said: "Without water there's no life, so this is highly significant and like everything on Mars, absolutely tantalising. Mars is a big place and the problem with looking for signs of life there is that if you don't find it where you land, there's always the chance you've landed in the wrong spot. These pictures show that something, probably water, flowed down those gullies recently and then presumably evaporated away, leaving what seem to be mineral deposits behind. What this tell us is that if you want to look for life, this is the place to look."

Scientists have long wondered whether life ever existed on Mars and Nasa's mantra in the search for extraterrestrial life has been to follow signs of water. On Earth, all forms of life require water to survive. Among the planets in our solar system, only Earth has a more hospitable climate than Mars, and some scientists suspect Mars once sheltered primitive, bacteria-like organisms.

Previous missions found evidence that the red planet at one time boasted ample quantities of water, and the question is whether liquid water is still present.

Canals and craters

· In 1895 the American astronomer Percival Lowell reported observations of canals across Mars. The canals were portrayed as an attempt by an intelligent species trying to survive in a drying world. Missions throughout the 20th century revealed the surface to be drier than any desert on Earth.

· Mariner 4 gave scientists on Earth their first close-up view of Mars after its launch in 1964. It took 20 pictures of the planet as it flew past and had sensors to measure magnetic fields.

· In 1976 two Nasa Viking craft landed on the Martian surface, beaming pictures of the planet's rocky surface back to Earth. The craft studied soil samples, weather, magnetic fields and seismology.

· In 2004, measurements from Nasa's Opportunity rover on the planet's Meridiani Planum plain show the rock's material had once been wet.

· In 2004, studies into Martian rock found evidence that water once formed rivers, lakes and shallow seas. Wave patterns in layers of sediment had been preserved in the stone.

· Mars Global Surveyor has now spotted possible signs of water seeping from canyons and craters. They may have come from melting patches of snow, or could be streaks of dust.